KARACHI, Aug 19: The government is actively considering to impose five to 10 per cent import duty on compressed natural gas (CNG) cylander and compressor as the exemption on these items in the shape of zero import duty expires on October 1.

This was hinted at by the Petroleum Secretary, Abdullah Yousuf in a meeting with chairman Pakistan Petroleum Dealers Association and CNG Dealers Association, Abdul Sami Khan in Islamabad last week.

Giving details of the meeting, PPDA chief said that the petroleum secretary had clearly indicated that the government was withdrawing exemption on cylinders and compressors for the CNG station owners from October.

The petroleum secretary said the duty was being imposed on the instructions of the Ministry of Commerce.

Evaluating the impact of the duty the PPDA chief said that the levy would prove a disaster for not only the CNG station owners but for the consumers as well.

“We have asked the petroleum ministry to extend the exemption for another five years for promotion of the CNG culture,” he added.

More than Rs10 million investment is required to set up a CNG station. “In case any import duty is levied, the cost of investment will rise, which will discourage the prospective investors in this area,” he added.

CNG owners usually import compressors and cylinders from Italy, New Zealand, England and Canada at zero duty for setting up a CNG station.

Pakistan is now rated number three CNG user in the world.

According to sources in the Petroleum Ministry, the government intends to convert over 300,000 petrol-run vehicles to CNG by the end of next year.

The sources said that so far more than 265,000 vehicles have been converted to cheaper source of fuel. More than 242 CNG stations have been set up in different parts of the country which include 239 in the private sector and three in the public sector. More than 3000 CNG stations are under construction in the private sector.

Till July 1999, only 50 CNG stations were set up while 50,000 vehicles converted to CNG in the country.

More than 850 licences for installation of new CNG stations have been issued to cater to the requirement of 265,000 CNG converted vehicles and above 20.4 million cubic feet gas is being compressed every day.

The government has been encouraging the use of CNG to cut petroleum import bill besides improving the environment.